making those who are relatively better off, namely workers with health insurance coverage, feel vulnerable and less prepared to share scarce resources with those who lack a job or health insurance by, for example, extending public benefits to them (Ehrenreich, 1989; Rubin, 1994). Communities with relatively high uninsured rates may experience economic difficulties when uninsurance places new financial demands on local health services providers who make significant contributions to the local economy. As a result, the communities most in need of taxsubsidized assistance to health services institutions and providers may be the least likely to have the tax revenues and be able to afford to finance care for uninsured and underserved persons (Lewin and Altman, 2000).

In this chapter the Committee discusses several probable economic consequences of uninsurance, first characterizing these varied potential community effects as hypotheses and then distinguishing between those for which adequate evidence exists and those requiring further documentation and research. The chapter is organized into five parts. The first three sections consider potential effects of uninsurance on the local economy, through (1) the relationship between uncompensated care locally and increases in health care costs and spending, (2) the increased pressures on states and localities to support greater public spending on health care in response to high or rising uninsured rates, and (3) the loss of fiscal stability by health care institutions, due to high uncompensated care burdens, that may lead to the loss of this major component of the local economy. The fourth section explores new ways to think about potential effects of uninsurance on a community’s social bonds and its social institutions in the context of the recent research literature on income inequality, social capital, and health. The fifth section draws together a discussion of key research questions that, once addressed, will fill in the details about economic consequences of uninsurance for communities.

THE CONTEXT: INCREASING HEALTH CARE COSTS AND TAXPAYER SUPPORT

Over the past two decades the uninsured rate nationally has grown slowly but steadily, despite an increasingly tight labor market that expanded employment-based coverage and yielded tax revenues to expand public coverage. Present economic trends have changed from boom to economic recession and, absent major policy interventions, indicate a continuing rise in the uninsured rate. Projected health care cost and health insurance premium increases are likely to add to the ranks of the uninsured (Chernew et al., 2002; Cutler, 2002). It is probable that rising numbers of the uninsured, in turn, will result in further increases in the costs of care and coverage for those with health insurance. In the face of renewed health care inflation, employers have not yet dramatically dropped coverage for their employees but have increased cost-sharing and pared benefits (Strunk et al., 2002). The Committee’s observations in Coverage Matters remain valid:

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